As we reported last week, leading brands are expanding their use of DTC marketing. Mostly through E-commerce. Yet, they are not the only ones turning more to their own E-commerce selling. That means U.S. E-commerce is booming. Relatively speaking over time.
Overall Data: U.S. E-Commerce Is Booming
First, we turn to Felix Richter, writing for Statistica:
“Over the past 20 years, E-commerce steadily rose in size and reach. According to Statista’s Digital Market Outlook, more than 250 million Americans will purchase online purchase this year. But how big is E-commerce really in the grand scheme of things?”
“As the following infographic based on data from the U.S. Census Bureau, shows, the impact of online shopping on total retail sales remains smaller than many people might think. In the first quarter of 2020, E-commerce accounted for 11.5 percent of total retail sales (excl. food services sales), The second highest share ever, and the highest for a non-holiday quarter.”
“11.5 percent doesn’t seem like a lot considering the perceived importance of online retail. However, it’s still a huge increase compared to where E-commerce was 20 years ago. It also needs to be noted that total retail sales include categories such as motor vehicle and parts dealers, gas stations and of course grocery stores, where E-commerce still plays a very minor role.”
The Example of Target and E-Commerce
Now, we highlight a retailer example involving E-commerce is booming– Target. And it is a mixed blessing.
In this scenario, Willem Roper reports for Statista that:
“Target released its quarterly earnings report, with the highlight being a 141 percent increase in online sales from a year ago. Other highlights include over 11 percent growth in revenue and a nearly 11 percent increase in same-store sales. Because Target kept doors opens during COVID-19 restrictions to sell groceries and other essential supplies.”
“The growth in digital sales was unprecedented. But it came at a heavy cost. Supply chain and labor costs rose significantly for the company to keep up with online demand. And net profits fell to $284 million – down from $795 million a year earlier. Higher-margin items also contributed to a loss in profit, with apparel falling 20 percent in overall sales during the quarter. Ultimately, Target CEO Brian Cornell said that the COVID-19 pandemic created a quantitative loss of over $500 million for the company this quarter. The company sold plenty of groceries and lower-margin items online, but sales failed to increase profits.”
